ARBITRATION LAWS IN PAKISTAN

Arbitration is a legal process which takes place outside of the courts, but which still results in a final and legally binding decision similar to a court judgment. Parties involved in arbitration are effectively opting out of the court system and submitting their case for resolution by a neutral, third party arbitrator. The reasons for selecting arbitration vary from case to case. Arbitration is generally faster, less expensive and more informal than going to court. It also has the advantage of being private and confidential.

Within the limits permitted by law, parties are free to negotiate the ground rules under which they want the arbitration to take place, such as the number of arbitrators or whether formal rules of evidence will apply. Binding arbitration clauses can be written into most kinds of contracts, requiring that in the event a dispute arises in conjunction with the contract, the parties will go to binding arbitration instead of to court. The cost of arbitration is generally shared by the parties.

The decision of an arbitrator is as binding on the parties to the arbitration as a court judgment, and it can be enforced by the courts, if necessary.

Law in Pakistan
What is arbitration?

Arbitration is a method of dispute resolution in which a neutral third party, the arbitrator, conducts an evidentiary hearing and/or reviews written submissions from the parties involved. Upon consideration of the evidence, the arbitrator makes a legally binding decision which can be enforced in the same manner as a civil court judgment.

Arbitration differs from mediation in that once you enter the arbitration process, you are bound by the arbitrator’s decision. Mediation is a process of negotiation in which the mediator helps the parties negotiate a mutually acceptable solution.

How does arbitration work?

Arbitration conducted through Josh and Mak International is governed by the applicable rules of arbitration. The commercial, employment and personal injury rules of arbitration provide an administrative structure for the arbitration, including a method of selecting a mutually acceptable neutral arbitrator. The selected arbitrator then rules on pre-hearing disputes or questions, conducts the arbitration session, and issues a binding decision or award.

Arbitration hearings are attended by the parties involved, their attorneys, the arbitrator, and the parties’ witnesses. Each party makes an opening statement, presents evidence, questions and cross examines witnesses, and makes a closing statement. During this presentation, formal rules of evidence generally do not apply. Alternatively, arbitration can be conducted with written submissions only in appropriate cases. The arbitrator then renders his or her decision and/or award.

What are the benefits of arbitration?

Arbitration provides distinct advantages over the court system in many different types of disputes. Because arbitration is a private method of settling disputes, parties can tailor the arbitration proceeding in almost any manner they choose. For example, parties involved in arbitration can agree to limit the number of witnesses each side will present, set parameters on the amount and type of evidence that will be presented, and pre-determine what issues the arbitrator’s award, if any, should cover.

Another important benefit of arbitration is its ability to provide the parties with an arbitrator experienced in the subject matter of the dispute. Many cases involve complex evidence, testimony, and documents. The arbitrator’s knowledge allows for a quick understanding of the issues, which in turn saves time and expense.

Because they are conducted by private agreement, arbitration hearings are not open to the public and the decisions reached are generally not matters of public record.

What is high-low arbitration?

In high-low arbitration the parties mutually establish, prior to the hearing, a range in which the award must adhere to. If the arbitrator’s decision is between the high and the low figures, that amount is the final award. However, if the award is above the pre-set maximum, it automatically moves down to the previously agreed-upon highest figure. Conversely, if the arbitrator’s decision is below the established minimum, the award moves up to the predetermined lowest figure. In most instances, the parties agree to not inform the arbitrator of the range of their High-Low agreement.

Is arbitration final?

Arbitration awards are final and legally binding and may not be appealed except under very limited circumstances provided by the statute. Awards may be confirmed in any court having jurisdiction and, thereafter, carry the same force and effect as an original court decision. Rules of arbitration include an internal appeals procedure, but it does not apply unless the parties specifically so state in their contract to arbitrate.

Mediation

Mediation is a process in which a neutral third person, the mediator, encourages and facilitates the resolution of a dispute between two or more parties. It is an informal and non-adversarial process which has the objective of helping the disputing parties reach a mutually acceptable and voluntary agreement. With non-binding mediation, decision-making and authority rests entirely with the parties involved. The mediator acts as a facilitator, effectively guiding the parties towards identifying issues, engaging in joint problem-solving, and exploring creative settlement alternatives. Although the process is voluntary and nonbinding, it results in a strikingly high settlement rate. There are a variety of reasons to select mediation, rather than litigation or arbitration, and it has become increasingly common for courts to order parties to mediate in cases in which they have not engaged in settlement negotiations prior to trial.

Parties are generally more satisfied with a mediated resolution, rather than one imposed upon them such as happens with a court judgment, because the parties created the solution themselves. In recent years, the use of binding mediation has developed as an alternative to arbitration and incorporates the negotiation aspects of mediation with the certainty of an outcome. Mediation is also much less costly than protracted litigation or arbitration.

The use of binding and non-binding mediation has increased greatly in both the private and public sectors, particularly for legal and business disputes. Many companies have chosen to insert mediation clauses into standard contracts as a preliminary dispute resolution step before arbitration or litigation. Josh and Mak is a leader in providing innovative uses of mediation to resolve disputes throughout the country. Our team has developed standard mediation procedures which apply to all cases submitted to our offices.

How we can help you through the mediation process

During the last 10 years, mediation has grown into one of the most popular alternatives for resolving civil disputes in the Pakistan. Many lawyers, insurance companies, risk managers and legal departments now use mediation on a day-to-day basis to help resolve claims and litigation as quickly and efficiently as possible. Across the country, Josh and Mak International, through its local branch offices, successfully mediates many thousands of disputes every year in a wide variety of legal areas.

What types of disputes can be resolved through mediation?

In short, all types. Mediation has been successfully used for tort claims, commercial and business disputes, construction issues, employee grievances, environmental claims, professional malpractice allegations, product liability claims, maritime issues, insurance coverage disputes, real estate interpretations, partnership dissolutions, securities-related disputes, domestic relations matters, and workers’ compensation claims.

It makes no difference whether liability is admitted or hotly contested, whether the case is in litigation or not yet filed, or whether the dispute involves a few thousand dollars or many millions of dollars or issues not financially related, mediation has proven effective in all of these situations.

What are the benefits of mediation?

The speed at which disputes are settled is the big one as almost every case will settle prior to trial. So the real issue is not will a case settle, but when. A mediation session has the effect of getting settlement negotiations in place much quicker than if the case proceeds to trial. Proposing mediation is an excellent way to get settlement discussions moving in the right direction and away from court. Other benefits of mediation are;

  • Saving money – An early settlement naturally saves litigation expenses and other costs related to managing the dispute

  • Maintaining control – Mediation differs from arbitration or trial because the mediator does not make a decision or force any party to accept a settlement

When you agree to mediate a dispute, you are only agreeing to attend the mediation session and participating in a good faith effort to settle the matter. Consequently, you are always in full control of the outcome. The mediation session is designed to educate everyone about the legal and factual issues involved in the dispute, and this can be particularly helpful to people who are unfamiliar with the litigation or claims process. For example, many attorneys have told us that their clients would not have accepted a reasonable settlement offer had they not attended a mediation session.

Because of the confidential nature of private meetings, often referred to as ‘caucuses,’ the mediator can explore settlement options without exposing your final position. This can remove the “posturing” that takes place during traditional negotiations.

The mediator can play a major role in simply organizing the discussions. The mediator can work closely, and confidentially, with each side to explore settlement possibilities and put a settlement package together and also organize multiple party negotiations of all involved agree to being in the same room together.

Mediation is particularly appropriate in situations in which the disputing parties will be working together after the dispute is resolved and acts to preserve their relationships. Such examples include construction projects, commercial leases, business partnerships, business suppliers, and employment relationships. Mediation allows the parties to stay on the best terms possible by doing everything they can to settle their dispute as quickly and easily as possible.

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How is a mediation case started?

Typically, one party to in a dispute will contact the nearest Josh and Mak International office to initiate mediation or propose mediation to the other parties. Ideally, the parties will have discussed the possibility of mediation prior to contacting Josh and Mak, although there is also option of having up make the initial contact regarding mediation. In some situations, Josh and Mak International will act as an impartial organization, which gives a greater chance of gaining all the parties’ participation in the mediation process. Because mediation is such a feasible solution to many issues, Josh and Mak International administrators are usually successful at convincing everyone to participate. Under the Josh and Mak fee schedule, which varies by office, there is generally no administrative fee charged if a necessary party declines to participate in mediation. All Mediation procedures are conducted in accordance with uniform Josh and Mak International procedural regulations.

What takes place at the mediation session?

All parties to a dispute will be present at the mediation session. For example, participants in a typical personal injury case usually include the plaintiff and the plaintiff’s counsel, an insurance company representative, possibly a defense attorney, and the mediator. In a commercial case, the owners and/or managers would attend, along with their attorneys.

All parties, representatives and the mediator first meet in a joint meeting format. After introductory remarks by the mediator and the signing of the Agreement to Mediate, if not already signed, each party is given the opportunity to explain its position in the presence of the other participants. These short and informal opening statements, typically no more than ten to twenty minutes long, are the starting point for the mediator to gain an understanding of the case.

After the joint session, the mediator will meet with each side individually. These separate meetings, called caucuses, are confidential. In each caucus, the mediator will discuss the risks of the case; best and worst outcomes, quality of evidence and the costs of litigation. The mediator will also explore possible settlements. It is common for the mediator to go back and forth between the parties for a number of private meetings, just as the mediator may bring the parties back together for joint discussions. If the mediation results in a settlement, the parties may choose to draft a formal settlement agreement.

What if the case isn’t settled?

Most cases will settle at the mediation session or shortly thereafter. If a settlement is not reached during this session the mediator may continue the discussions by telephone, and in some cases the parties may elect to have a second session. If a full settlement is not reached, the parties are free to pursue other options such as arbitration or litigation. Parties whose cases don’t settle in mediation at Josh and Mak do not pay any additional administrative fee to proceed with arbitration through when you use our firm to pursue this.

How to prepare for a mediation session?

Preparing for a mediation session is much easier than preparing for an arbitration or a trial as;

• No pre-session pleading is required, although in a more complex case the parties may wish to furnish the mediator with a short brief or explanatory documents that were prepared for another purpose

• Prior to the mediation session, all parties should have obtained sufficient information to make settlement decisions. It is common for Josh and Mak International and/or the mediator to help with informal exchanges of information. Please make Josh and Mak, or the other parties, aware of any information you need prior to the mediation session.

• A critical element of a successful mediation is that each side must be represented by a person with adequate authority to settle the case. This typically means that clients, business managers, etc. should attend.

• A ten to twenty minute opening statement should be prepared. Keep in mind that this is an excellent opportunity to talk directly to the other side. Representatives should consider whether their clients should participate in this presentation

• Obviously, you need to be prepared to discuss the details of your case and have instant access to any prevalent information.

How much will mediation cost?

No filing fee is required upon initial submission of a case. Each Josh and Mak office charges a basic administrative fee and subsequent hourly, or per diem, fees for the mediator’s time, which will be pre-collected at the time of scheduling or billed after the mediation is concluded.

In many cases, the parties agree to divide the mediation costs, although it is not uncommon for one party to pay the entire cost. There must be a clear fee agreement prior to the mediation session taking place.

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What cases should be sent to mediation?

As discussed in previous sections, any type of case can be mediated, and there are often many benefits to mediating. Josh and Mak has developed a checklist of characteristics for selecting cases for mediation. Each of our offices provides in-house training in how to identify mediation cases.

How are mediation clauses used?

Many businesses and attorneys are routinely inserting mediation clauses into contracts. By using such a clause, the parties are pre-agreeing to use mediation in the event of a dispute.

Our team knows that disputes are inevitable, and some of them can be settled by the parties without outside intervention. Other disputes may require a jury trial as the only viable option. Most disputes, however, can be resolved through the effective use of one or more of the Alternative Dispute Resolution (ADR) services provided by Josh and Mak International .

We provide full consultation services to insurance companies, law firms, businesses and government agencies who are looking for cost-effective ways to manage claims and litigation. The services provided range from scheduling a single mediation, arbitration or fact-finding hearing to designing and implementing a multi-step, nationwide grievance process. Through consultation with Josh and Mak International, many businesses have developed dispute avoidance techniques such as mediation clauses, arbitration clauses or in-house training courses in conflict management.

Other services we offer range from designing settlement day mediation programs for large numbers of similar claims to orchestrating mini-trials and arbitration for complex commercial disputes. Whatever the issue and appropriate approach, Josh and Mak maintains a staff of consulting ADR providers who can recommend the correct procedure to follow for each individual situation.

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